Refer to the above figure. Line EBD is called
A. the 45-degree line.
B. the saving function.
C. aggregate demand.
D. the consumption function.
Answer: A
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A personal tax cut of $50 billion will affect income differently than an increase in government spending by $50 billion because
A. households may save part of the additional income from the tax cut. B. the increase in government spending is less expansionary than the increase in taxes. C. the increase in government spending will produce a political business cycle. D. households may consume more than the additional income from the tax cut.
Since 1929, the distribution of income in the United States has become:
a. substantially more equal. b. slightly more equal. c. slightly more unequal. d. substantially more unequal.
Under a system of fixed exchange rates, what will happen if the price of a currency is set above market equilibrium? How can this be remedied?
An economist would describe college fees as
a. an investment in human capital. b. a transfer payment. c. a waste of parents' money. d. an economic loss.